An interesting research note this morning from our Unum Trading Desk analyst, Lester Davids:
"Since November 2017, South African citizens have become accustomed to hearing the term "New Dawn" - a reference to the expected change in the country's fortunes due to the change political leadership.
From the onset of the handover, a new wave of optimism ensued with financial market participants voting with their feet and stomping their way into the local currency.
The Rand (USDZAR), which had started to naturally weaken in the run-up to the ANC's elective conference toward the end of last year, saw a huge gain as the elected candidate was perceived to bring a positive change to the ailing South African economy.
From November 2017 to early in 2018, the Rand strengthened from a low of R14.58 to a high of R11.50, putting some pressure on South Africa's Rand hedge shares and weighing on the overall index."
Unfortunately, the "New Dawn" honeymoon looks over, as negative local economic news, and EM weakness has returned the Rand to previous highs (vs the USD)
"Since November 2017, South African citizens have become accustomed to hearing the term "New Dawn" - a reference to the expected change in the country's fortunes due to the change political leadership.
From the onset of the handover, a new wave of optimism ensued with financial market participants voting with their feet and stomping their way into the local currency.
The Rand (USDZAR), which had started to naturally weaken in the run-up to the ANC's elective conference toward the end of last year, saw a huge gain as the elected candidate was perceived to bring a positive change to the ailing South African economy.
From November 2017 to early in 2018, the Rand strengthened from a low of R14.58 to a high of R11.50, putting some pressure on South Africa's Rand hedge shares and weighing on the overall index."
Unfortunately, the "New Dawn" honeymoon looks over, as negative local economic news, and EM weakness has returned the Rand to previous highs (vs the USD)